From: alexhormozi
Effective decision-making and a strategic approach to risk are crucial for success in business and personal development. This involves understanding when to commit, how to assess opportunities, and the importance of sustained effort.
The Act of Deciding
Deciding means “to cut off or kill off” a future path [00:00:27]. Not making a decision actively kills off the future that holds one’s dreams [00:00:37]. An early mentor emphasized the need to just “jump” once sufficient research is done, as more information won’t necessarily lead to a decision [00:00:13].
The Power of an Irresistible Offer
The secret to sales is making an offer so compelling that people feel “stupid saying no” [00:00:49]. Instead of trying to manipulate or build rapport, focus on creating products and services people genuinely want [00:01:03]. This approach changed how new products and services were created, by working backward from what would make most people say “yes” [00:01:10].
Strategic Pacing and Sustained Effort
Go Slow to Go Fast
A common piece of advice is to “go slow to go fast” [00:01:19]. This means focusing on consistent, sustained activity over an extended period rather than erratic, short-term actions [00:01:29]. What appears slow in the short term often leads to significant compounding effects and faster growth in the long run [00:01:34].
The Cost of Change
Any change incurs a guaranteed “fixed cost” [00:01:48]. While there’s a price to pay for change, there’s no guarantee it will work [00:01:50].
Volume and Consistency
Success often hinges on sufficient volume and consistency of effort. When given advice, it’s crucial not to let the lack of activity or duration be the reason for failure [00:02:22]. Many entrepreneurs fail because they do something for too short a time or with too little volume, even if the underlying strategy is correct [00:02:29]. This tradeoff of consistent effort ensures true results.
Navigating Opportunities and Risks
Shifting Perspective
Observing others’ success, even if they seem disorganized, can break self-limiting beliefs [00:02:50]. Realizing that successful individuals are “made of the same thing as you” [00:02:56] allows one to use their achievements as fuel for inspiration rather than a source of feeling inadequate [00:03:09].
Assessing Opportunity Leverage
It’s important to differentiate between a “level 10 skill set” and a “level two opportunity” [00:03:31]. A “level two opportunity” is defined by low leverage, meaning it doesn’t provide a good compounding vehicle for capital [00:03:57]. Being successful in a low-leverage situation indicates strong underlying skill sets that can lead to much bigger wins in a higher-leverage environment [00:04:02]. This relates to Understanding risk in investments.
Seizing “Fat Pitches”
“Fat pitches” – periods when things become easy or start working really well – don’t come often [00:04:30]. During these times, it’s crucial to “go hard” rather than easing off the gas [00:04:32]. Failing to do so risks losing everything to larger competitors [00:04:34]. This often means sacrificing short-term gains for long-term success [00:04:59].
Doubling Down on What Works
When a business initiative is successful, the real win is often to “do 10 times more of that thing” rather than seeking new wins or starting new ventures [00:05:32]. The hardest part is achieving product-market fit; once that’s established, focus innovation on increasing volume [00:05:37].
The “Learning Budget”
Allocate a percentage (e.g., 10-20%) of marketing spend towards new ideas, expecting to lose that money [00:05:54]. This “learning budget” provides permission to spend money without an immediate return, extending the time horizon for return to a lifetime [00:06:16]. This approach allows for continuous learning, faster improvement, and the freedom to be creative and fail [00:06:02]. This is a practical application of Understanding risk in investments.
Aligning on Decisions
In collaborative decision-making, if there’s no agreement, do not move forward [00:06:59]. A false sense of urgency is often self-imposed [00:07:07]. By slowing down and asking what information might be missing or what different frames of reference exist, partners can leverage shared values and mission to ultimately reach the same conclusions, avoiding many mistakes [00:07:16]. This is a cornerstone of Effective decisionmaking and the importance of listening.
Scaling Through Delegation and Focus
Expanding Total Addressable Market
While starting with a niche (“riches are in the niches”) is effective, at a certain point, it becomes necessary to broaden the target audience or “open up the aperture” to achieve greater scale [00:07:51].
Empowering Others
To scale significantly, it’s not about what you do, but about empowering others [00:08:16]. This means giving talented individuals a “slice of the pie” and allowing them to get rich [00:08:28]. The ability to trust others to make decisions on your behalf, ideally even better than you could, is crucial [00:08:43]. By acquiring expertise through others who have dedicated years to their departments, an organization can amass hundreds of years of collective experience, far exceeding the limits of one person’s knowledge [00:09:00]. This contributes to developing resourcefulness in business.
The Price of Impact
Achieving significant impact comes with a cost, such as increased public exposure and loss of privacy [00:09:44]. While there are inconveniences, the pros of wider recognition and the ability to attract highly aligned teammates who share the same mission and values outweigh the cons [00:10:04].
The Power of Volume in Content Creation
There are universal principles in business, such as “the more work you do, the more you get” [00:11:14]. This “boring work” applies to everything, including relationships, cold calling, and content creation [00:11:16]. Increasing the volume of output, such as content posts, can lead to proportionate growth [00:11:07].
Investment Strategy and Product Excellence
Defining Investment Parameters
When dealing with substantial capital, deal flow for investments is not the problem; rather, it’s the lack of defined rules or parameters [00:11:34]. Establishing clear capital allocation parameters based on one’s expertise can simplify investment decisions, reduce decision fatigue, and save time on due diligence [00:11:36]. Investing primarily in what one intimately understands—for example, businesses if one knows business—reduces perceived risk and allows for faster action, leading to better returns [00:12:08]. This aligns with Understanding risk in investments and Risks and rewards of investing in businesses.
Leverage Through Product Excellence
An exceptional product creates a “quadratic relationship” with its audience, meaning one person’s purchase leads to others telling multiple people, creating exponential growth (e.g., 1 to 2, 2 to 4, 4 to 8) [00:12:41]. Good marketing or sales, conversely, is a linear relationship [00:12:45]. It is less work in the long run to build an exceptional product than to constantly market and sell a mediocre one [00:13:11]. The product itself is the strongest source of leverage in a business [00:13:19].
The Power of Brand
Brand is a quantifiable asset, measured by the premium a product can charge above its commoditized version [00:13:30]. This pricing power directly impacts the bottom line and is a powerful way to retain market position [00:13:43]. A strong brand becomes a compounding vehicle due to increasing audience awareness [00:13:51].